Private higher education lender MPOWER Financing is planning to raise $297.6 million from the securitization market, in a follow-up deal to its inaugural securitization last year.
MPOWER 2025-A has a smaller initial pool balance than its first deal, and with a larger loan count at 13,783, its average outstanding balance per loan stands at $22,726. Also, the collateral pool includes loans from U.S. and Canadian borrowers, KBRA said, with Bank of Lake Mills originating loans to the former borrowers, and MPOWER opening loans for the latter.
While sponsoring the deal, MPOWER is also master servicer, with Launch Servicing on the deal as subservicer and Vervent as the backup servicer, according to KBRA.
MPOWER Education Trust 2025-A will issue three tranches of A, B and C notes, and they all have a legal final maturity date of July 21, 2042, according to ratings analysts. The classes A, B and C notes benefit from initial credit enhancement levels of 21.5%, 7.7% and 5.4%, respectively. Gross excess spread on MPOWER 2025-A, 5.93%, increased noticeably over the 3.50% spread on the MPOWER 2024-A.
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The transaction's structure includes credit enhancements such as a modified sequential pay structure, and subordination. Senior notes will receive principal payments before junior classes, up to the point where each class meets its specific overcollateralization target. KBRA notes that classes A, B and C have targets of 36.0%, 28.0% and 23.5%, respectively.
DBRS takes note of the high degree quality of the borrowers, pointing out that approximately 81.95% of borrowers in MPOWER's collateral pool have either graduated from one of its eligible graduate degree programs in science, technology, engineering and math (STEM) or business.
MPOWER 2025-A also includes a non-declining reserve account which, at closing, was funded to an amount equal to 0.50% of the initial pool balance.
KBRA assigns A to the class A notes. DBRS, for its part, assigns A, BBB and BB to classes A, B and C notes, respectively.
